Shearman & Sterling LLP | Financial Regulatory Developments Focus | European Banking Authority Publishes Full Impact Assessment of Basel III Reforms on EU Banks
Financial Regulatory Developments Focus
  • European Banking Authority Publishes Full Impact Assessment of Basel III Reforms on EU Banks
    Following the summary it published on December 7, 2017, the European Banking Authority has issued its full cumulative impact assessment of the impact of the finalized "Basel III" prudential framework on EU banks.

    The finalized Basel III framework, announced on December 7, 2017, includes further elements developed with the overall aim of addressing undue variability in the calculation of risk weighted assets and improving the comparability of banks' capital ratios.

    Using December 2015 data, the EBA has conducted an analysis of the impact of the December 2017 revisions on the EU banking system. The EBA's impact assessment outlines, at a high level, the effect of the December 2017 revisions on: (i) minimum required capital; (ii) regulatory capital ratios, leverage ratios and capital shortfalls; and (iii) the extent to which banks are constrained by the different metrics of capital requirement in the revised framework, namely the output floor, the leverage ratio and risk weighted assets.

    The EBA proposes to conduct additional impact assessment exercises on the impact of Basel III so that the reforms for which there were no available data as of December 2015 can be included in the analysis. It will also use more recent data to better estimate the current impact. The additional impact assessment exercises will also allow banks to provide more representative data, as the results shown in this report are based on data provided by banks on a best-effort basis, according to their knowledge and understanding of the Basel III proposals as of April 2016.

    View the cumulative impact assessment.

    View the press release.

    View summary of the Basel III reforms.